Retailer Daily

Consumer Spending on the Upswing

U.S. consumers continued the increased spending pattern that began in January 2009 into February 2009. Consumers spent slightly more in February than they did in January even as personal income and disposable personal income levels took small dips. Highlights from the U.S. Bureau of Economic Analysis report follow.

Consumer Spending Rises, Income and Saving Falls

• Personal consumption expenditures increased 0.2% in February, following a 1% increase in January.
• Personal income in current dollars decreased 0.2% in February, following a 0.2% increase in January.
• Disposable personal income in current dollars decreased 0.1% in February, following a 1.6% increase in January.
• Personal saving as a percentage of income was 4.2% in February, compared with 4.4% in January.

While any increase in personal consumption expenditures by consumers is a positive for U.S. retailers, this is tempered by declines in personal and disposable personal income. There have been a number of mixed positive and negative economic and consumer behavior signals so far this year, including:

Positive Signals

• Online shopping activity is showing signs of improvement.
• The U.S. trade deficit shrank in January 2009, although declining consumer demand drove the reduction.
• Personal spending, income and savings levels of U.S. consumers increased in January 2009.
• The Restaurant Performance Index rose in January 2009.

Negative Signals

• The U.S. GDP shrank 6.3% in Q4 2008.
• Total spending for the Easter holiday is expected to decline.
• Mexico applied retaliatory tariffs to 89 U.S. products in March 2009.
• U.S. retail and food services sales fell in February 2009.
• U.S. unemployment hit 8.1% in February 2009.
• The Consumer Confidence Index reached an historic low of 25.0 in February 2009.